02 April 2017
What's Your Savings Ratio?
Your savings ratio or savings rate shows how much of your household income is redirected to savings. According the the US Bureau of Economic Analysis (BEA), April 2017 indicators report our US personal savings ratio at 5.60%. While this is slightly higher than in January 2017, we are still in a 5 year downward savings trend as also reported by the BEA. How much of your income are you saving today? It's a simple calculation. Here's the formula:
Your Annual Savings / Your Annual IncomeExample: Annual savings = $3,000 / Annual Income = $40,000 = 7.5% Savings Ratio Here's a few tips to get the most accuracy:
- Use your gross income as a base. This gives you a true picture of your savings rate taking your true household income as a base.
- Include all income. Have a part-time job? Realized portfolio income? Income from sales of property or pension distributions. Include it all as income!
- Include all of your savings. Retirement savings from your paycheck, automated bank transfers to savings accounts, what you're dropping in your change jar. Everything counts!